Fees and Cost

Attorney fees in Social Security Disability and Supplemental Security Income cases are regulated by Federal law. 42 U.S.C. § 406(a)("The Commissioner of Social Security may, by rule and regulation, prescribe the maximum fees which may be charged for services performed in connection with any claim before the Commissioner of Social Security under this subchapter, and any agreement in violation of such rules and regulations shall be void."); see also, HALLEX I-1-2-4 (Representative's Fees Subject to SSA's Authorization).

Subsequently promulgated Federal Regulations provide that "[a] representative may charge and receive a fee for his or her services as a representative only as provided in paragraph (b) of this section." 20 C.F.R. § 404.1720. In order to charge and receive a fee, a representative must file a written request with SSA before charging or receiving a fee for services. 20 C.F.R. § 404.1720(b)(1). SSA must approve the amount of any fee charged or received. 20 C.F.R. § 404.1720(b)(2). Finally, "a representative must not charge or receive any fee unless we [SSA] have authorized it, and a representative must not charge or receive any fee that is more than the amount we [SSA] authorize." 20 C.F.R. § 404.1720(b)(3).

Charging or accepting an unauthorized fee can subject a representative to criminal penalties under the Act:

“Any person who shall, with intent to defraud, in any manner willfully and knowingly deceive, mislead, or threaten any claimant or prospective claimant or beneficiary under this subchapter by word, circular, letter or advertisement, or who shall knowingly charge or collect directly or indirectly any fee in excess of the maximum fee, or make any agreement directly or indirectly to charge or collect any fee in excess of the maximum fee, prescribed by the Commissioner of Social Security shall be deemed guilty of a misdemeanor and, upon conviction thereof, shall for each offense be punished by a fine not exceeding $500 or by imprisonment not exceeding one year, or both. The Commissioner of Social Security shall maintain in the electronic information retrieval system used by the Social Security Administration a current record, with respect to any claimant before the Commissioner of Social Security, of the identity of any person representing such claimant in accordance with this subsection.” 42 U.S.C. § 406(a)(5).

In addition, charging or receiving an unauthorized fee can result in a representative losing his or her right to practice before SSA. SSA's rules of conduct and standards of responsibility for representatives provide, in relevant part: "[a] representative must not: . . . (2) Knowingly charge, collect or retain, or make any arrangement to charge, collect or retain, from any source, directly or indirectly, any fee for representational services in violation of applicable law or regulation. . . ." 20 C.F.R. § 404.1740(c). Violations of the foregoing prohibition can lead to suspension or disqualification from representing claimants before SSA. 20 C.F.R. § 404.1745.

Expenses are not included in fees authorized by SSA. HALLEX I-1-2-5(B) provides that "SSA is not involved in authorizing the amount of out-of-pocket expenses a representative collects. Out-of-pocket expenses are expenses a representative incurs, for which he/she has been paid or expects to be paid. Out-of-pocket expenses include, but are not limited to, the cost of obtaining copies of doctor or hospital reports and a birth and/or death certificate. Therefore, the fee SSA authorizes does not include payment for out-of-pocket expenses. These expenses are matters for the representative and claimant to settle."

Therefore, inclusion of language in the fee agreement regarding the claimant's obligation to repay a representative's out-of-pocket expenses will not cause the agreement to be disapproved under the fee agreement process. HALLEX I-1-2-12(C)(2). And many if not most attorneys' fee agreements provide that claimants must repay out-of-pocket expenses whether there is a favorable outcome or not.

I have a contrary view and require repayment of expenses only if a client is awarded benefits. All claimants are out of work and most go through significant financial hardship during the appeal process. If they receive no financial benefit from my representation, I feel it is improper to request repayment of expenses.

The most efficient and, thus the most common, method of collecting attorney fees in Social Security Disability Insurance Benefit (DIB) and Supplemental Security Income (SSI) cases is by use of a standard administrative fee agreement that complies with the Social Security Administration’s regulatory requirements.

"A fee agreement is a written statement, signed by the claimant and his/her appointed representative, specifying the fee the representative expects to charge and collect and the claimant expects to pay, for services the representative provides in pursuing the claimant's benefit rights in proceedings before SSA. Although the fee agreement must be a written statement, there is no statutorily prescribed language. Therefore, representatives may craft their own fee agreements and decision makers must approve an agreement if the statutory conditions of the fee agreement provisions are met and no exceptions apply." HALLEX I-1-2-11.

To qualify for the fee agreement process, the fee in the fee agreement must be limited to the lesser of 25 percent of the past-due benefits or $6,000. 42 U.S.C. § 406(a)(2)(A)(ii); HALLEX I-1-2-12(A)(3). In other words, the maximum fee under the fee agreement process is limited to the lower of two amounts: either 25 percent of the claimant's (and any auxiliary beneficiaries) past-due benefits or $6,000. If a claimant's past-due benefits exceed $24,000, the maximum fee is $6,000. If a claimant's past-due benefits are below $24,000, then the maximum fee is equal to 25 percent of the past-due benefits and that sum will be less than $6,000.

The maximum fee available under the fee agreement process is set out in the Act at 42 U.S.C. § 406(a)(2), which provides:

(A) In the case of a claim of entitlement to past-due benefits under this subchapter, if—

(i) an agreement between the claimant and another person regarding any fee to be recovered by such person to compensate such person for services with respect to the claim is presented in writing to the Commissioner of Social Security prior to the time of the Commissioner’s determination regarding the claim,

(ii) the fee specified in the agreement does not exceed the lesser of—

(I) 25 percent of the total amount of such past-due benefits (as determined before any applicable reduction under section 1320a–6

(a) of this title), or

(II) $4,000, and

(iii) the determination is favorable to the claimant,

then the Commissioner of Social Security shall approve that agreement at the time of the favorable determination, and (subject to paragraph (3)) the fee specified in the agreement shall be the maximum fee. The Commissioner of Social Security may from time to time increase the dollar amount under clause (ii)(II) to the extent that the rate of increase in such amount, as determined over the period since January 1, 1991, does not at any time exceed the rate of increase in primary insurance amounts under section 415 (i) of this title since such date. The Commissioner of Social Security shall publish any such increased amount in the Federal Register.

Pursuant to the Act, the Commissioner of SSA raised the maximum fee from $4,000 to $5,300 on February 1, 2002, and to $6,000 on June 22, 2009. HALLEX I-1-2-12(A)(3).

The following requirements must also be satisfied before a decision maker can approve a fee agreement under the fee agreement process:

The fee agreement must be filed with SSA prior to the issuance of a favorable decision. HALLEX I-1-2-12(A)(1); see also, 42 U.S.C. § 406(a)(2)(A)(i); HALLEX I-1-2-11.

The claimant and representative must both sign the fee agreement. HALLEX I-1-2-12(A)(2).

And the claim must result in past-due benefits. HALLEX I-1-2-12(A)(5).

In some situations, such as where a claimant has had more than one attorney, the standard fee agreement process will be inapplicable and the attorney(s) will be required to submit a fee petition along with a record of all time spent working on the claim in order to be compensated. HALLEX I-1-2-12(B).

In most situations, the attorney, if successful, will be paid 25% of your past-due benefits up to a maximum of $6,000.00. If your attorney is unsuccessful, meaning you are not awarded benefits, the attorney will receive nothing. There are, however, many potential oversimplifications in this brief answer.

Attorney fees in Social Security disability claims are heavily regulated by federal law; charging an unauthorized fee constitutes a criminal offense. If, however, an attorney complies with all necessary regulations and is successful in helping you obtaining past-due benefits, the Social Security Administration will pay the attorney fee directly out of your past-due benefits at the conclusion of the case.

Social Security disability benefits are funded by your payroll taxes. And attorney fees in disability claims are regulated by the Social Security Act to protect your payroll tax contributions and your benefits from improper practices.

At Matthew D. Lane, Jr., our attorneys personally answer your questions about the fee process at your initial meeting, review the fee agreement with you before signing, and will give you a copy of the signed fee agreement to take with you before you leave our office. We make the fee process as transparent as possible.

The short answers on costs/expenses

Costs and expenses are not regulated by federal law. The matter is left to be determined between the attorney and the client.

At Matthew D. Lane, Jr., if we win your case and you are found disabled, we will invoice you for reasonable expenses and costs incurred in proving your case. And on receipt of your past-due benefits, you then pay the expense invoice.

If, however, you are not found disabled, all costs and expenses are waived; you owe us nothing.

Costs and expenses are not regulated by federal law. The matter is left to be determined between the attorney and the client.

At Matthew D. Lane, Jr., if we win your case and you are found disabled, we will invoice you for reasonable expenses and costs incurred in proving your case. And on receipt of your past-due benefits, you then pay the expense invoice.

If, however, you are not found disabled, all costs and expenses are waived; you owe us nothing.

We help the people of Louisiana obtain Social Security disability benefits by guiding them through the lengthy and complex administrative appeal process. In addition, we appeal meritorious disability claims in Federal Court.

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Matthew D. Lane, Jr. is licensed to practice law in the State of Louisiana.
Disclaimer: The information on this website is intended for informational purposes only and should not be considered legal advice. Before taking any action, you should consult professional legal counsel regarding the specific facts and circumstances of your situation. The use of this website does not establish an attorney-client relationship.